B. Ravichandran ORDER
B. Ravichandran, Member (T)
1. Revenue is in appeal against the order dated 5.10.2015 of Commissioner (Appeals-I), Meerut. The respondents are engaged in the manufacture of MDF, particle boards, wooden flooring, etc. They are registered with the Department for paying central excise duty, where applicable. They have availed service of "Goods Transport Agency" (GTA). During the period April, 2011 to March, 2014, they paid service tax of Rs. 85,97,757/- on reverse change basis on such GTA service. Contending that such tax was paid erroneously by them and claiming exemption under S. No. 21 of Notification No. 25/12-ST : MANU/DSTX/0065/2012dated 20.06.2012, as amended for transportation of agricultural produce by road, the respondents filed claim for refund of the said amount. The Original Authority after examining the claim rejected the same on the ground that logs/wood/timber transported by the GTA for the appellant is not an agricultural produce and as such, the service tax paid by the appellant on such transportation service is correct and no exemption is available. On appeal, the Commissioner (Appeals) vide the impugned order reversed the decision of the Original Authority and allowed the refund claim. Aggrieved by this, the Revenue filed the present appeal.
2. Ld. AR elaborating the grounds of appeal by the Revenue submitted on the following lines:-
(a) As per notification No. 25/2012 : MANU/DSTX/0065/2012 (Sl. No. 21) services provided by the Goods Transport Agency by way of transport in a goods carriage of "agricultural produce" is exempt from payment of service tax. Timber logs transported in the present case are not agricultural produce.
(b) 'Agricultural produce' is defined under Section 65B to mean that "any produce of agriculture on which either no further processing is done or such processing is done as is usually done by the cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market". In the present case, the traders, who provide eucalyptus/poplar trees cut and sold by the owners, further processed them by cutting, pruning, debarking and as such, these cannot be considered as covered by the term 'agricultural produce'. The traders purchased the cut trees and further processed it. The processes cannot be said to be for making goods marketable for primary market. The primary market in the present case is from owner to the trader/dealer.
(c) The Commissioner (Appeals) erred in relying on the decision of the Hon'ble Bombay High Court in the case of SRI Rollers Mills Pvt. Ltd. - MANU/MH/0421/1991 : 1992 (59) ELT 361 (Bombay). The said decision and also the decision relied on by the Bombay High Court were all dealing with expression "plant". The said decisions dealt with 1989 order for regulation of import into India. The same has no direct relevance to decide the scope of wood logs/timber as 'agricultural produce'.
(d) Submitting that timber and wood logs cannot be considered as 'agricultural produce' in terms of Section 65B of the Finance Act, 1994 the ld. AR submitted that the Original Authority is correct in denying the exemption and the impugned order fell in error in reversing such decision.
3. Ld. Counsel appearing for the respondent submitted that the traders, from whom they have purchased the goods, have received the same in various sizes from the cultivators and the traders had not done any processing on the said goods. The trees are cut into logs of various sizes for transportation or as per the market requirement in the far........